News September 2016

Hinkley

The British government and EDF, the French energy company, signed the main contract for the new £18 billion Hinkley Point C nuclear power station yesterday. Jean-Bernard Levy, EDF chief executive, joined officials from the UK, France and China at a private ceremony in London. The signing was also attended by Greg Clark, the business secretary, Jean-Marc Ayrault, France’s foreign minister, Nur Bekri, China’s National Energy Administration director, and He Yu, chairman of CGN, the Chinese group that will have a 66 per cent stake in the joint venture. The government gave the green light for the power station in Somerset this month. It will provide electricity for nearly six million homes when it is completed in early 2020 and is the UK’s first new nuclear plant in a generation. Yesterday’s signing was the second attempt at closing the deal after Theresa May unexpectedly announced in July that she wanted to study the contracts more closely. Mr Clark said it was a “crucial moment” adding that Hinkley played “an important part in ensuring our future low-carbon energy security”. CGN said it was delighted to sign all final agreements for the Hinkley Point C project and a number of other agreements relating to Sizewell C in Suffolk and Bradwell B in Essex with EDF and the UK government.

Hinkley

The government and French energy giant EDF are set to sign the key contract for the new £18bn Hinkley Point C nuclear power station. EDF boss Jean-Bernard Levy is expected to join high ranking officials from the UK, France and China at the behind-closed-doors ceremony in London. Earlier this month the government gave the go-ahead for the plant which will power nearly six million homes. It will be the UK’s first new nuclear plant in a generation. The signing ceremony is a second attempt at finalising the deal after Prime Minister Theresa May unexpectedly announced in July that she needed more time. With her approval now granted and the contracts updated, the Department for Business is expected to confirm the formal signing on social media on Thursday afternoon.

Hinkley

Tom Burke: Hinkley is a 20th Century solution to a 21st Century problem. Bigger is no longer better. There are faster, cheaper, cleaner and smarter ways to deliver affordable, secure, low carbon electricity to Britain’s businesses and consumers. Nothing about this deal is good for Britain’s hardworking families. They will pay the bill for decades but most of the jobs will go abroad. It is a bad deal for consumers, for the climate and bad for the country. May’s decision to go ahead with Hinkley will slow down, and increase the cost of, making this transition in Britain. It will mean we will fall behind the rest of the developed world in building a flexible electricity system fit for purpose in the 21st Century. But this is not the only problem with Hinkley. The Investor Agreement that Greg Clark will sign with EDF is an irrevocable index-linked ‘take or pay’ contract to purchase 35 years’ worth of electricity from EDF at more than twice the current wholesale price. This will cost British consumers £37bn in subsidy, four times that originally forecast (this is also twice the largest figure presented to Parliament in the Departmental Minute of October 2015 that sought authorisation to take on the liabilities of the Agreement – this raises the question of whether the government has the authority to sign the Agreement at this time). It means Britain’s electricity consumers will pay more than £1bn per year in subsidy to EDF for 35 years. It will prevent Britain’s consumers buying cheaper electricity if it would displace that from EDF. Furthermore, this deal binds future governments.

Hinkley

Martin Horwood introduced a motion at the conference opposing the construction of the nuclear power station at Hinkley Point C, that was given a controversial go ahead by the government this month. It will be built with a combination of French and Chinese money. Martin quoted a National Audit Office report that said the likely costs of the power plant to be built in Somerset to billpayers had risen from an estimated £6 billion in 2013 to £30 billion. He criticised the government for changing the policy on not providing public subsidies for nuclear power and said: “There hasn’t been a single nuclear power station built anywhere in the world on time, on budget and without public subsidy. The EPR model being model being used at Hinkley hasn’t actually been built at all yet. The two in progress, in Finland and France are billions over budget and years late.

Hinkley

Hinkley Point C nuclear station: an expensive solution to a cheap problem. In 10 years it’ll be outdated, costing more than other energy alternatives and raising UK electric bills, writes Andreas Gandolfo. My colleagues and I at Bloomberg New Energy Finance are still scratching our heads at how such a project was greenlighted. We’ve spent two years analysing the project, and it’s clear: by the time the plant is operational in 10 years it will be completely outdated, trying to keep up with a modernized grid. But perhaps most concerning, Hinkley will cost more than other energy alternatives and will increase electric bills across the UK. When we compared this price to any alternative, it’s clear that nuclear is the most expensive option (see chart). Worse still, the UK taxpayer will indirectly fund the project to guarantee its owners’ revenue. To get Hinkley built, the government signed a 35-year, inflation linked, contract for difference (CfD) — a price guarantee —with EDF, at a staggering £92.5/MWh (in 2012). Other new nuclear plants are expected to get similar contracts, both in price and duration. As a comparison, for the 2017/18 delivery year, onshore wind and solar projects received much less, with 15 year CfDs at £80/MWh. We found that the government’s new nuclear policy would cost UK electricity consumers an extra £24 billion compared to our fall-back alternative. This money could be used to encourage the adoption of new, clean, and promising technologies. In the past, government support schemes have driven the build out of uncompetitive technologies, helping lower their costs significantly. For example, wind and solar costs have dropped by 21 per cent and 62 per cent respectively over the last six years, during a period of high government subsidies and build targets. It is true that in 2040, a UK electricity sector without nuclear, and (conservatively) assuming more gas, would emit 37 per cent more carbon emissions. This, though, misses three issues. First of all, our modelling shows that between 2015 and 2040, emissions from electricity generation in the UK will fall by 60-70 per cent, irrespective of scenario, the lower end of this range representing the fall-back scenario and the higher end the nuclear scenario. That drop is primarily driven by a large uptake in renewables. Second, the power industry will evolve as rapidly in the next 10 years as it did in the last. Given space and opportunity, new clean, flexible technologies will come to the fore. Finally, nuclear comes with its own environmental concerns, as the storage of spent fuel is a long term issue. Given the data, all the analysis we’ve written for the past two years is proof that Hinkley Point and the policy it represents come with few advantages that other technologies can’t offer. The disadvantages are many. The UK government is locking bill payers into a few large projects that will deliver a lot less bang for their buck, and divert resources away from other, more promising, technologies.

Hinkley

The UK government has agreed to sign the contracts with french utility giant EDF for the Hinkley Point C nuclear power plant on Thursday. French financial newspaper Les Echos reported that the signing ceremony will take place in London, not Somerset as it had been planned in July when Prime Minister Theresa May asked for a delay at the 11th hour. The China General Nuclear Corporation (CGN), which is making a £6bn investment in the project, will also be present, it added. Les Echos also said that EDF’s board will meet on Tuesday to discuss the new conditions the UK set for the project. The requirement that EDF must keep a majority stake in the project during construction is expected to be a key focus. The UK government gave the £18bn Hinkley project the greenlight but with a “revised agreement” last week. It had been temporarily halted due to security concerns stemming from Chinese involvement.

Moorside

Powerful decision-makers are being urged to think of the greater good so all of Cumbria can cash in on its biggest investment in history. And they have been urged to do everything possible to ensure the county is given the best possible chance to secure major opportunities. Hundreds of major economic players have been hearing about the prospects for the nuclear industry at a conference in Carlisle.

Hinkley

Trust me, I won’t go a penny over budget on Hinkley: Britain’s new £18bn nuclear plant is finally under way… Now EDF’s boss has to build it on time. De Rivaz is outraged when I put to him the claims of a senior consultant engineer of my acquaintance, that the technology could be dodgy. ‘Nothing could be more untrue,’ he replied with barely concealed contempt. ‘I cannot understand how that expression is used for technology which has been approved by the safety regulator in the UK, which has been approved by the Chinese safety authority. ‘On the contrary, it meets the highest safety standards among all nuclear reactors being built in the world at present.’ So what then about the much-publicised delays in building the twin reactor at Flamanville in Brittany? ‘The project in Flamanville is now fully on track and fully compliant with the reset schedule we gave one year ago,’ EDF’s UK chief insists. ‘The Chinese projects [using the same design] are now completed in terms of construction and are about to enter the commissioning and test phase… it’s a very positive reality. How on earth would EDF and its Chinese partners put £18billion at risk on a project if we weren’t confident in the ability to do it on time and budget?’ De Rivaz is equally robust when it comes to defending the price for the electricity, the burden of which British electricity customers will have to shoulder for at least a quarter of a century after completion. ‘The simple truth is the high price is competitive with other low-carbon technology,’ he says. He points out that his plant has a life of up to 60 years whereas other low-carbon technologies, such as wind, have ‘well-known problems of intermittency’, which means they cannot be relied upon at all times.

Hinkley

The planned Hinkley Point C nuclear plant will be outpaced by cheaper, lower-carbon energy sources that will render it largely obsolete within a decade of opening, new University College London analysis indicates. The analysis, based on National Grid’s own energy scenarios, shows that by 2030 wind and solar energy sources will, for increasing periods of the year, be meeting all the UK’s electricity needs. With Hinkley not expected to begin operating until well into the 2020s, the plant is likely to be directly competing with more environmentally-friendly, and often much cheaper, energy sources – effectively tying the British consumer and taxpayer to an increasingly obsolete and irrelevant source of energy. The findings suggest Hinkley Point could only operate at ‘baseload’ if it forces these renewables sources off the system. Otherwise, it would have to reduce its own output, which could strain its operation and reduce its promised revenues. This means that for decades British consumers will be tied to using energy that is far more expensive than readily-available renewable sources like wind and solar. The UCL analysis even shows that by 2030, for growing periods of the year renewable sources will be able to solely fulfil demand. This starts to happen when around 30% of electricity is generated from wind and 10% from solar. The National Grid has suggested this could be easily met by 2030 – and the UK Secretary of State has indicated that the UK expects to achieve around 35% of electricity from renewables overall by just 2020.

Hinkley

Liberal Democrats in Somerset have come out firmly against the planned new nuclear power station at Hinkley Point. The Leader of the Liberal Democrat Group at Somerset County Council, spoke at the Liberal Democrats Autumn Conference in Brighton in favour of the motion opposing the construction of a new nuclear power plant in Somerset. But despite attacking the decision she agreed the Lib Dems in Somerset would “work with” the decision in the event of their taking control of the county council at the elections next May.